Mountain State Times

Governor Jim Justice of West Virginia has proposed a plan to cut the state's personal income tax by half. This proposal is intended to support small businesses, many of which have faced challenges such as a pandemic, supply chain disruptions, labor shortages, and inflation.

Although the proposal does not include reducing the corporate tax rate, it would benefit many small businesses. These entities are often structured as pass-through entities where profits are taxed at the individual owner's personal tax rate. Lowering this rate could provide these businesses with opportunities to invest in equipment upgrades, wage increases, or simply maintaining operations.

The plan has met some resistance from lawmakers concerned about its financial implications. Despite this, West Virginia concluded its last fiscal year with a $1.4 billion budget surplus. Governor Justice argues that this surplus allows for tax cuts without necessitating compensatory measures elsewhere in the budget.

Justice estimated that taxpayers might save around $1 billion annually if his plan is implemented. He suggested that this savings would boost consumer spending and increase sales tax revenue.

In his State of the State Address, Governor Justice stated that adopting his income tax reduction strategy would effectively make citizens their own "stimulus package." The governor emphasized that small businesses play a crucial role in West Virginia's economy. According to data from the U.S. Small Business Administration, 98.8 percent of all businesses in West Virginia are classified as small businesses.

The proposal aims to alleviate economic pressures on these businesses by helping them recover and expand after recent difficulties related to supply chain issues and inflationary pressures.

Governor Justice highlighted the broader community benefits of supporting small enterprises: “When we help small businesses, we help everyone.”